A landmark ruling in a recent Kansas Supreme Court case
may have given millions of distressed homeowners the legal wedge they need to
avoid foreclosure. In Landmark
National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held
that a nominee company called MERS has no right or standing to bring an action
for foreclosure. MERS is an acronym for Mortgage Electronic Registration
Systems, a private company that registers mortgages electronically and tracks
changes in ownership. The significance of the holding is that if MERS has no
standing to foreclose, then nobody has standing to foreclose – on 60 million
mortgages. That is the number of American mortgages currently reported
to be held by MERS. Over half of all new U.S. residential mortgage loans are
registered with MERS and recorded in its name. Holdings of the Kansas Supreme
Court are not binding on the rest of the country, but they are dicta of which
other courts take note; and the reasoning behind the decision is sound.